Tuesday, April 05, 2011

I had a thought today, what with all the SaaS stuff out there and the increasing technical proficiency of new users, who often out-strip their internal IT departments in how they use and apply technologies. Is there a point to an IT department?

What is IT? "Information Technology" is the term but the reality is that when we say IT we mean the "internal development of technology". This department made a lot of sense when IT consisted of a lot of arcane programming and complex networking, in a world where no-one understood what "integration" really meant or why it was important for transactions to be atomic and for people to understand what two phase commit actually meant.

But does that world exist anymore? In particular I mean is there a point to having a great big IT department with IT management and Enterprise Architecture in a world where businesses change and where technology is an integral part of any modern business strategy in the same way as staff are. Has anyone heard of an "HR Project Manager" who organises the resources for a project? I certainly haven't, I've heard of HR admin or support for a project but the project management is left to the leader of the project. Why isn't IT going that way?

We have cloud computing, SaaS and all these other bits so doesn't that mean that with Mashups and the like that the IT department of the past is doomed?

Now this should be where I say "no" and then explain why, but instead I'm going to say "yes".

You see when I go into most IT departments they are mainly self-sustaining beasts, they have philosophies and leadership all of their own and more often than not have a CIO who is as close to the leading edge of technology trends as the CFO they work for. The IT department drives customisations, by providing the ability for the business to do it without the explanation as to why they shouldn't. The IT managers and IT project managers are often so fixed on a particular technology that they are an active barrier to the company changing its approach.

Its the IT department and its holistic henchmen of Enterprise Architecture who provide the barriers to cloud adoption and who promote the use of internal solutions, solutions they control and customise, over external provision. As the business starts to take control of business architecture and lay out the financial model for IT rather than simply a wish list of requirements its hard to see what the point of traditional project managers or enterprise architects is in this new world. Particularly in a new world where the business can just look at a SaaS solution and say "yup, that'll do" rather than complete a long project of customisation and installation.

As infrastructure becomes completely virtual the need for "experts" who can buy and install "the right server" disappears.

So what is required in future IT, is there any need for IT professionals? Well yes of course there is for several reasons

1) Everything will never come in a package2) You'll aways need to integrate stuff

The key point is that differentiation is what IT people should focus on and start handing over responsibility for the commodity stuff to the business departments that use them. Finance should take control of the finance packages, HR should run the HR packages both as integral parts of their business. Sales should take control of their CRM and marketing packages. This switch of control would help accelerate the move to SaaS and away from customised solutions where they don't add value.

I'm not arguing here for a decentralised IT department, I'm arguing for the externalisation of IT and its management by the business and not by IT professionals.Yes sometimes the IT department helps drive the change, but very rarely from what I've seen, as the business becomes more tech-savvy than the old school tech managers its time for the business to take control back.

So what is left in IT? Well for me its the bits of IT that really add the value, the bits genuinely concentrating on where the business sees potential for ROI. In other words its the solution folks in IT, the real technologists who pull together various pieces and add a touch of development to create something that really differentiates the company. I'd guess this would be less than 20% of IT spend today, so my proposal is simple.

So what does that really mean? Well it means that current IT back office systems are really going the way of networks, mobile phones, land-lines and the like and moving out of technology and into procurement. In future the business will procure SaaS for back-office rather than ask IT departments to deliver it. The old IT department will be left doing "just" the differentiating parts.

So in other words the end result of this revolution is going to be that IT spend is split between procurement of services via normal business challenges and the commissioning of differentiating services. This should mean that the IT department is more about custom build than about package delivery, which is a marked difference over today.

So yes the current IT department is going away, but its replacement is going to be focused on smaller and more specific areas of the business and focused where innovation delivers actual value. This is not something that most IT departments will be happy with as it commoditises much of their current work. This is why in the coming change there will be many IT departments where the change will be extremely traumatic.

I firmly believe this change will happen and that traditional IT departments will be the biggest barrier in their inability to recognised the difference between business value and IT cost.